SEC settles for $4 million with New Jersey capital management firm for alleged Ponzi scheme

By Mark Iandolo | May 10, 2017

WASHINGTON (Legal Newsline) — The Securities and Exchange Commission (SEC) announced May 4 that Verto Capital Management and CEO William Schantz III will pay roughly $4 million after allegations of conducting a Ponzi scheme.

According to the SEC, the defendants raised an estimated $12.5 million by selling promissory notes to purportedly fund Verto Capital’s purchase and sale of life settlements, which are life insurance policies sold in the secondary market. The SEC alleges Schantz misrepresented to investors that the company was profitable, but it had actually failed to turn a profit in several years. Schantz purportedly resorted to using investor funds for personal use and paying prior investors with the money made from new investors.

“As alleged in our complaint, investors were told that the life settlement-backed notes were short-term investments with an unlikely event of default.  Schantz and Verto misled investors about the company’s past performance and the value of the collateral, and they diverted significant investor funds for Schantz’s personal use,” said Andrew M. Calamari, director of the SEC’s New York Regional Office.

Handling the ongoing case for the SEC are Jennifer K. Vakiener, Vincent T. Hull, Christopher Mele, Thomas Feretic and Steven G. Rawlings in the New York office. Lara S. Mehraban is supervising the case.

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